Friday, March 18, 2011

The Math is Different at the Top (Part III - Will Water Set the World on Fire?)

The first two articles in this series (Part I, Part II - Financial Threats to Power) discussed the effects of the ongoing financial crisis from the perspective of global financial elites, who have traditionally used such crises to concentrate more wealth and power in the national and international institutions (corporations, government agencies, etc.) which they control. It was suggested that the recent sociopolitical developments in Africa and the Middle East, while driven primarily by the deterioration of the global financial system, are not enough to rid the system of the parasitic elites in charge.

In fact, it is highly likely that either a) the "popular" insurrection currently taking place in Libya was partially fomented by the U.S. military-industrial complex or b) the insurrection is in the process of being co-opted by the same, which would obviously like nothing better than to gain control of Libya's oil reserves. [1], [2]. Throughout the latter half of the 20th century, financial contracts and direct/indirect military interventions were repeatedly used to extract critical resources from these regions, but now there is no more ability or time to rely on the former. Even the traditional CIA tactic of organizing, training and implementing regional coups may be too unreliable and time-consuming at this point.

Despite their control over vast networks of intelligence and propanda, the elites have not managed to convince the local populations of these countries that their interventionist policies are in the least bit helpful. A majority of people in Egypt, Libya, Afghanistan, etc. are entirely opposed to foreign interference and/or occupation, but, unfortunately, this sentiment is largely irrelevant to the elites. If bitter and protracted civil wars break out all across the region, the elites will simply continue to go about their business, securing resources and strategic locations, while the rest of the world watches on with apathetic indignation. However, the simple math guiding the strategy of elites takes a detour into complexity when widescale sociopolitical disruptions begin occurring throughout the developed world, including Japan, the U.S. and Europe, as they will soon enough.

How do you contain a population of fiending debt addicts experiencing their worst stages of withdrawal? Is the imposition of martial law and suspension of due (legal) process enough, or will the sheer desperation of the people win out? The elites may be able to circumvent the constitutional protections of various countries, but, as so many other things in our systemic world, that tactic is a double-edged sword, because people will have very little reason to hold out for a better future once those most basic governmental protections have been stripped away. A renewed storm of rapid financial turmoil will most assuredly take the developed world "by surprise" in the next year or so, but it is not exactly clear how people will react, how governments will respond or how large the scale of systemic disruption will be.

The closest historical example we have to the current financial crisis is the Great Depression, and the elites certainly emerged from the other side of that event more powerful than ever. There is evidence that the same group of moneyed elites actually financed both the Third Reich and the Allies during World War II, which of course ended only after the U.S. developed nuclear weapons of mass destruction and dropped two of them on Japan. They then proceeded to "hedge" their bets again and financed both the U.S. Empire and the Soviet Empire, and currently we see a major shift of investment capital to China. At those earlier and simlper times, however, there were plentiful reserves of fossil fuels available and natural ecosystems had only been partially exploited by industrial process.

In Part II, it was posited that global wealth inequality is a good measure of socioeconomic complexity resulting from finance, but overall complexity is best measured by global energy consumption. This measure has been exponentially increasing for well over a century now, and the trend has both destroyed natural ecosystems and depleted at least half of the world's oil reserves, which had comprised the largest source of net energy and corresponding increases in complexity. The explosion of global financial instruments after World War II greatly exacerbated this dynamic, since it allowed additional industrial activity that would not have otherwise occurred. This article will specifically focus on ecosystem degradation as a significant, near-term threat to financial elites, as it dramatically effects very critical (strategically, economically, politically) parts of our global system.

Water Ecosystem Degradation

It is one thing for large populations to lose their real and perceived financial wealth, but an entirely more disruptive thing for those populations to lose access to clean water and adequate food. There are two nations that provide the quintessential example of a breeding ground for sociopolitical instability brought on by industrialization and resulting environmental degradation - Pakistan and India. The former state was arbitrarily created after the end of British colonial rule of India in 1948, and its borders were drawn in a fashion that exarcebated long-standing tensions between Muslim and Hindu populations and divided control over critical resources. Both of these countries are labeled as suffering from "acute water scarcity" by the United Nations, and this trend will significantly contribute to chronic food shortages, as they both rely on irrigated agriculture for exports and also to feed their growing populations. [3].

Much of India's water scarcity is directly or indirectly (population growth) caused by the industrialization of its economy. The discharge of untreated sewage from urban areas into rivers and streams has introduced many organic and inorganic toxins into surface waters. Heavy use of fertilizers and pesticides in the agricultural sector have significantly contributed to polluting almost 70% of the country's surface water and a growing number of groundwater reserves, rendering much of them unsuitable for human consumption, irrigation or industrial processes. There are also many other industrial factors making this horrible water situation even worse, including the destruction of forest, wetland and coastal ecosystems, as well as climate change (discussed more in Part IV). [4].

Pakistan is in a very similar situation, as it relies on water resources for agriculture and industry, which have in turn degraded the quality of its surface and groundwater over many years. [5]. Of course, it also shares many of the same sources of water with India (Indus River and its tributaries), and this fact sets up the likelihood of greatly increased conflict (perhaps full-blown war) between the two states within the next few years. India is already in the process of constructing 33 new hydro-electric dams, some of which are located in the hotly-disputed Kashmir territory, and studies indicate that their cumulative storage of river water could divert significant amounts of water from Pakistan during its growing season. [6]. These projects may be in violaton of the Indus Water Treaty of 1960 (dealing with water sharing), but humans find it easy to make such agreements when resources are abundant, and as they quickly evaporate (or contaminate), painfully desperate countries cannot be expected to, and will not, continue to recognize international law.

Neither of these countries have significant domestic sources of energy (other than hyrdro-electric), both have a growing number of people born into poverty (India is the second-most populus country in the world, contains some of the most densely populated areas, and has one of the poorest populations), and both have dwindling water resources that are critical for agriculture, industry and households. [7]. It is truly a ticking timebomb that encompasses two states with a bitter ethnic/religous rivalry and nuclear arsenals waiting in the wing. The latter fact, along with India's importance to the global economy, makes upheaval in these countries a major threat to financial elites attempting to maintain global order and control. The Indus River Basin is often reffered to as one of the birthplaces of human civilization, and it could very well ignite the fire that eventually burns the power structures of modern civilization to the ground.

Many of the disturbing environmental trends mentioned above can also be found in another state with a major economies (second largest) and a nuclear arsenal, albeit to a somewhat lesser extent - China. An unoffical Census report has recently estimated that total discharges of harmful chemicals into China's rivers and lakes amount to 30.3 million tons in 2007, twice the number that had been officially reported. Government planners had estimated that Chinese water sources could only handle about 7.4 million tons of discharge a year, which is more than three times less than what the report found. Much of the discharge comes from industrial processes and chemical agricultural, which account for 90% of its water consumption.

Due to a rapidly growing economy and population, environmental degradation, increasing droughts and wealth inequality, almost a quarter of China's population (primarily in the North) did not have access to safe drinking water as of 2009 and nearly 15% currently suffer from water-related illnesses. [8], [9]. China is also the largest exporter of agricultural crops in the world, and water scarcity is becoming an imminent threat to this industry. Many farmers in the Northern plains have already stopped producing wheat because of unreliable surface water and no access to groundwater. Chinese agriculture employs 300 million people in the country, and anywhere from 5-19% of the population already suffered from "hunger" according to the World Food Programme's estimates in 2006.

It is then clear that a majority of the world's population is quickly losing its access to adequate water supplies necessary for maintaining production and consumption, and will therefore fall deeper into sickness, hunger and bloody warfare. Although the financial elites in power are most likely aware of these trends and their implications, it is still a situation unlike any other they have ever encountered in history. Destruction of water ecosystems in India and China, along with the tense dynamic between India and Pakistan, reflect irreversible environmental trends that will unfold in a very chaotic, non-linear manner, and the ensuing outcomes will be largely outside of the control of financial power elites.

Many other large countries are well down the path to facing isses of water (food) scarcity in the upcoming future, including the U.S., as they have destroyed their natural ecosystems through industrial development and toxic agriculture. However, the ecosystems of most developed countries are still capable of providing sufficient water to their populations at this point, and it is unlikely that another "Deep Water Horizon" event will incite a populist revolution. The more pressing concern for those countries is access to cheap and efficient energy, as they completely rely on such energy for the production of numerous goods, the provision of services (i.e. healthcare), transportation, international trade and industrial agriculture.

Next time, in the final part of this article series (Part IV), we will explore the issues of peak oil and climate change from the perspectives of financial elites, who will witness these systemic instabilities quickly spread across our global networks, leaving no developed country immune from its devastation, especially those that rely on imported oil to meet a signficant portion of its domestic energy consumption needs.The sheer lack of preparedness or resilience in these regions for a systemic energy or environmental shock is mind-boggling at the individual perspective, but perhaps it is precisely the state of dependency that financial elites want their populations to be in when these crises hit. At the same time, the elites themselves may be the ones who are truly dependent on environmental, economic and social systems that are generally predictable and stable; ones that simply cannot exist without access to increasing net energy.